Argo AI, an autonomous vehicle startup that burst on the scene in 2017 stacked with a $1 billion investment, is shutting down — its parts being absorbed into its two main backers: Ford and VW, according to people familiar with the matter.
During an all-hands meeting Wednesday, Argo AI employees were told that some people would receive offers from the two automakers, according to multiple sources who asked to not be named. It was unclear how many would be hired into Ford or VW and which companies will get Argo’s technology.
Employees were told they would receive a severance package that includes insurance and two separate bonuses — an annual award plus a transaction bonus upon the deal close with Ford and VW. All Argo employees will receive these. For those who are not retained by Ford or VW, they will additionally receive termination and severance pay, including health insurance. Several people told TechCrunch that it was a generous package and that the founders of the company spoke directly to its more than 2,000 employees.
“In coordination with our shareholders, the decision has been made that Argo AI will not continue on its mission as a company. Many of the employees will receive an opportunity to continue work on automated driving technology with either Ford or Volkswagen, while employment for others will unfortunately come to an end,” Argo said in a statement.
Ford said in its third-quarter earnings report released Wednesday that it made a strategic decision to shift its resources to developing advanced driver assistance systems, and not autonomous vehicle technology that can be applied to robotaxis. The company said it recorded a $2.7 billion non-cash, pretax impairment on its investment in Argo AI, resulting in an $827 million net loss for the third quarter.
That decision appears to have been fueled by Argo’s inability to attract new investors. Ford CEO Jim Farley acknowledged that the company anticipated being able to bring autonomous vehicle technology broadly to market by 2021.
“But things have changed, and there’s a huge opportunity right now for Ford to give time — the most valuable commodity in modern life — back to millions of customers while they’re in their vehicles,” said Farley. “It’s mission-critical for Ford to develop great and differentiated L2+ and L3 applications that at the same time make transportation even safer.”